The West Bank and Gaza Strip erupted in violence as demonstrators took to the streets to mark with rocks, bottles and burning tires on the 52nd anniversary of what they call the ''Nakba'' or ``catastrophe'' of Israel's creation.

Ayed Safadi, 18, was shot in the neck during clashes near Nablus in the West Bank. He became the second Palestinian killed in four days of clashes that began over Palestinian demands for the release of 1,650 Palestinians imprisoned by Israel.

``For them, this day is a reason to party,'' Israeli Deputy Defense Minister Ephraim Sneh said sarcastically to Israel Radio. The army later said at least five Israeli soldiers were also wounded in the clashes.

Hoping to boost a sagging peace process -- but risking the defection of right-wing partners in his coalition -- Israeli Prime Minister Ehud Barak won cabinet approval for giving Palestinians full control over two villages near Jerusalem.

Angry at covert Israeli-PLO peace moves under way in Sweden, Yasser Abed Rabbo, the head of the Palestinian team negotiating a final peace with Israel, resigned. He said he had not been informed of the secret talks.

In Gaza, black smoke filled the sky as hundreds of demonstrators set fire to tires and hurled stones at troops guarding the Jewish settlement of Netzarim. Soldiers responded by firing rubber-coated metal bullets and teargas.

Protester Mahmoud Abdel-Al, 14, told a reporter: ``I want to say that we are fighting to return to our homeland and we hope that the Palestinian police fight on our side instead of trying to disperse us.''

Similar clashes erupted in the West Bank, sparked by the anniversary and the prisoner issue. Sunday troops shot dead a boy of 17 near the West Bank town of Qalqilya, witnesses said.

Two Minutes Of Silence Observed

In Ramallah in the West Bank Monday, ambulance workers said 231 Palestinians were wounded -- more than anywhere else -- by rubber-coated metal bullets. Witnesses said four Palestinian policemen and two Israeli soldiers were shot and wounded in an exchange of gunfire.

In the northern West Bank town of Jenin, witnesses said four Palestinian policemen and an Israeli army officer were wounded in a gunfight.

Elsewhere in the West Bank, witnesses and rescue workers said the rubber-coated metal bullets wounded 27 Palestinians in Tulkarm, at least 10 in Bethlehem, four in the Nablus area, and a 17-year-old youth in Jenin.

Witnesses in Gaza said 30 Palestinians, including five policemen and five journalists, were wounded by rubber bullets.

Borrowing a page from Israeli Holocaust memorial day traditions, Palestinians observed two minutes of silence at 10 a.m. across Gaza and the West Bank, including Arab East Jerusalem, when sirens wailed on Voice of Palestine radio.

Traffic stopped and Palestinians stood still in the streets. Muslim preachers called ``Allahu Akbar'' (God is greater) through loudspeakers from mosque minarets and church bells rang. A commercial strike was also in effect.

Israel's creation in 1948 uprooted hundreds of thousands of Palestinians who became refugees in the West Bank, Gaza Strip and neighboring Arab states.

In Lebanon, home to 350,000 registered Palestinian refugees, demonstrators burned U.S. and Israeli flags.

Israel meanwhile called on the Palestinian Authority to put on trial Hamas master bombmaker Mohammed Deif, Israel's most wanted Islamic militant fugitive, whose capture by Palestinian security forces became public Sunday.

Israel holds Deif responsible for killing dozens of Israelis in 1996 suicide bombings. Hamas opposes Israeli-PLO peace deals.

By a vote of 15 to 6, Israel's cabinet backed Barak's proposal to transfer two villages near Jerusalem, including Abu Dis, to full Palestinian control, a move he said was necessary to avoid ``stalemate and deterioration'' in the peace process.

Palestinians want East Jerusalem for a future capital. Speculation has long been rife they could site their capital in Abu Dis, with a land corridor link to Jerusalem itself under a compromise formula to resolve the city's status.

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